Bilal Hafeez, Ben Ford
When evaluating the performance of our momentum models we are considering the average performance across the one-, three-, and 12-month momentum models. Summary Momentum models moved sideways over the past week. A positive rates (+0.3% WoW) outing battled poor equity (-0.4% WoW) and FX (-0.1% WoW) performances. Equity momentum models remain the best-performing model over […]
Bilal Hafeez, Viresh Kanabar
Summary In the US, Powell’s congressional testimony (Wednesday) will likely stress the need for more good inflation data before the Fed can cut. Nonfarm payrolls and wages (Friday) are likely to surprise on the upside. In Europe, the ECB should keep rates steady on Thursday but revise forecasts. We still expect a June cut at […]
Bilal Hafeez, Viresh Kanabar
Summary In the US, Friday brings seasonal factor revisions to the CPI. These could impact the path of the FFR. Currently Powell seems set on no rate cut in March. Europe and the UK hear from central bank policymakers and see several key surveys updated, including the services PMIs. Elsewhere, a slew of central bank […]
Bilal Hafeez, Viresh Kanabar
Summary In the US, the Fed meets on Wednesday. We expect them to hold rates steady while preparing markets for a cut in March. In the UK, the BoE will likely hold rates unchanged on Thursday, taking a more dovish profile in the near term. January CPI is the main release of the week for […]
Richard Jones
Summary Since last May, EUR/GBP has traded in a ~0.8500/~0.8800 range. This week, EUR/GBP printed its lowest levels since September, primarily catalysed by a hawkish pricing tilt in BoE expectations. We think this hawkish BoE pricing has gone too far and that ECB easing will be less aggressive than the market currently prices. Market Implications […]
Henry Occleston
Summary It was another reduced labour market release (full labour force survey data will be corrected and updated in January hopefully). But what we did get was dovish. Total weekly wage growth dropped 0.8ppt (from an upwardly revised +8.0% YoY) to +7.2%. Meanwhile, regular pay dropped 0.5ppt from an upwardly revised +7.8% in September. Most […]
Richard Jones
We expect USD downside in December, mostly in the last two weeks. However, the outsized November fall may have already accounted for much of the move.
Henry Occleston
Summary The OBR downgraded real growth across the forecast horizon but upgraded nominal growth forecasts on the back of higher inflation ahead. Ahead of what could well be an election year in 2024, the UK Chancellor’s Autumn Statement provided a 2ppt cut to national insurance contributions. We expect next March’s budget to provide further backing […]
Richard Jones
Markets are chopping around in ranges, with the November highs/lows across the G10 FX and rates space to contain price action into year-end.
Viresh Kanabar
We consolidate our favourite biases into one, easy-to-read, weekly report! Please find the original pieces linked throughout and a summary table at the end of the document. Reach out to us on Slack or email the author with any questions about the content. Latest Updates FX, Rates, and Commodities: Beware MoF intervention when selling JPY […]
Bilal Hafeez, Viresh Kanabar
Last Week’s Highlights 10Y yields collapsed… What drove the move? Last week’s price action was dominated by the collapse in long-end yields, which fell almost 30bps (Charts 1 and 3). Several factors drove this move. On Monday, the US treasury announced it would need to borrow $76bn less than expected at $776bn in privately held […]
Richard Jones
Despite a challenging macroeconomic backdrop, with less than stellar survey and hard data in the Eurozone, the euro (EUR) has proven resilient in recent weeks.
Henry Occleston
Summary We expect the BoE to hold the Bank Rate at 5.25%, likely with fewer voters backing a hike than at the last meeting (when it was 5:4 in favour of a pause). The MPR forecasts are likely to be far more dovish than in August. Higher unemployment and lower expectations of wage growth will […]
Richard Jones
Despite a challenging macroeconomic backdrop, with less than stellar survey and hard data in the Eurozone, the euro (EUR) has proven resilient in recent weeks.
Matthew Tibble
US equities exhibit strong seasonal patterns. Q4 typically sees stocks rally, especially over October and November.
Richard Jones
With a softening economy and more dovish central bank, we think GBP downside will accelerate into Q4.
Viresh Kanabar
US inflation came in hot, hot, hot! While US core CPI aligned with expectations, headline at 3.7% exceeded them.
Bilal Hafeez, Ben Ford
Momentum models (-0.8% WoW) registered negative returns across FX (-0.4% WoW), rates (-1.4% WoW) and equities (-1.0% WoW).
Matthew Tibble
Summary Investors are in risk aversion mode due to the Israel-Hamas conflict, but the dollar may not benefit. September’s bumper NFP print is likely an outlier. CHF bearishness is building among real money and hedge funds. Despite suggestions otherwise, US and EU gasoline demand remains robust. Is Risk Aversion Good for the Dollar? It’s Complicated… […]
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